If the Fed has succeeded at just one thing, it has been to create a steep yield curve. The spread between the 10 year treasury yield and the 2 year yield is flirting within basis points of its all time high of 2.91% set in February 2010:
Fuel for Inflation
Sit on cash earning 0% or lock up a the money by taking advantage of the steep yield curve. This is exactly the dilemma that the Fed wants you to face. They want you to become an investor further out on the yield curve which allows all debt burdened entities to term out their debt at lower yields. It also fuels speculation as financing becomes dirt cheap for everyone with a pulse – “Just promise me a return greater than zero….” Reinflate, Reinflate, Reinflate.
